2018 is now firmly upon us and, as we make our way through the first month of the new year, it’s as good a time as any to look forward to what the next 12 months will bring for those of us who operate in the Scottish private rental sector.
Spring Statement – March 13 2018
The Spring Budget is no longer, replaced from 2018 by the Spring Statement. For the past two decades, the Chancellor has delivered the Budget in the spring and a statement in the autumn, but Philip Hammond has decided to shake that up with a new system.
The Budget now takes place in autumn, with the Spring Statement not counting as a ‘major fiscal event’ but one that is there to discuss ideas and address longer-term issues in addition to setting out the latest economic forecasts.
While Scotland’s devolved administration has full autonomy over a range of issues, the Scottish government is still directly affected by what happens at Westminster and, as such, a close eye needs to be kept on major fiscal events south of the border.
Rollout of 5G – March 2018
At the recent Autumn Budget significant funds were set aside for new technology, and in particular 5G networks. While 5G networks are some way away from being rolled out on a national basis, BT’s EE is rumoured to be trialling 5G networks from March 2018 onwards.
5G, a next generation network which aims to enhance mobile data to allow it to cope with the increased demand for streaming services and apps, is set to be launched in 2019 with full UK deployment by 2020.
As we know, tenants now place a great deal of importance on internet speeds and superfast broadband, so it’s something that landlords need to bear in mind. The Scottish government is certainly on board if its budget plans for 2018 – set out in the middle of last month – are anything to go by. The Draft Budget pledged to commit £600 million to delivering ‘superfast broadband to all homes and premises by 2021’.
Further tax changes for landlords – April 2018
In April 2017 the phasing out of mortgage interest tax relief – an idea proposed by former Chancellor George Osborne in 2015 – began in earnest. Before the changes were introduced, we looked at what the restriction of mortgage interest tax relief meant for landlords and how they could prepare for it.
April 2018 will mark a year since the phasing out started, with the new system due to be fully introduced by April 2020.
Starting last year, for the 2017/18 tax year, the allowable mortgage interest tax deduction from property income was restricted to 75%. This April, for the 2018/19 tax year, it will be reduced to 50%. These reductions will continue until the 2020/2021 tax year, when all landlords’ finance costs will be claimed at the basic rate of income tax reduction.
During this transition period, landlords are being given time to adapt to the new way of doing things. To offset the potential damage to their profits, many landlords chose to incorporate, which is where a property portfolio is transferred to a limited company to pay lower tax on profits.
While there were fears of a mass exodus of landlords from the market, the evidence so far suggests this hasn’t happened, with landlords choosing to evolve their processes rather than depart the market entirely.
GDPR comes into play – May 25 2018
A key date for the diary, the way data is protected will be changed forever when the General Data Protection Regulation is introduced towards the end of May.
The new rules, which will replace the Data Protection Act 1998 and will apply to all UK businesses, aims to better protect organisations and individuals from potentially costly data breaches.
The key definitions of the new legislation are set out on the ICO’s website and, given its focus on sensitive personal data, the right to access and the right to be informed, will play a key role in the property industry when it’s introduced. Landlords, as well as the letting agent they’re working with, will need to be up to speed with the new data protection regulations to ensure no breaches occur.
One year anniversary of major PRS changes – December 1 2018
The first anniversary of the biggest changes to the Scottish private rented sector in 30 years, which saw a new type of tenancy introduced to offer more stability to tenants and more security for landlords, letting agents and lenders.
The Assured Shorthold Tenancy was replaced by Private Residential Tenancies (PRT), with measures in place to reduce the amount of paperwork for landlords and 18 specified circumstances in which a landlord would have grounds for repossession. It also aims to help enable landlords to refer a case for repossession more quickly if a tenant is in arrears.
As of now, it’s still too early to say how successful (or otherwise) the new tenancy has been. Judgements will be easier to make once the first anniversary hits, with a proper appraisal of the new system easier to conduct at this point.
These are just some of the many key dates for the diary in 2018. And, as we know, the property world can be unpredictable and ever-changing, so nothing can ever be predicted with 100% certainty.
The signs for another strong year for the Scottish private rented sector, however, are positive, with increased tenant demand and landlords keen to expand their portfolios. 2018 is also the year in which major changes to the organisation of letting agents will be implemented. Watch out for our further blog on this soon.
For more information about what Letting Solutions can do for you, please get in touch with us on: 01506 425693.
As West Lothian’s first dedicated lettings agency, we also provide free and instant online valuations to give you an idea of how much your rental property could be worth in the current marketplace.